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Small Business Administration (SBA) Loans for Women
There are a number of options available to women for obtaining
small business loans. One of the most well-known types of
business loans available for women is through the Small Business
Administration (SBA).
The Small Business Administration does not lend money directly
to women, corporations, partnerships, or other individuals, but
rather, Small Business Administration loans for women can simply
guarantee loans that have been submitted by financial
institutions. In other words, a woman interested in a business
loan can be obtain a loan easier if the loan is approved and
guaranteed by the Small Business Administration. Small Business
Administration Loans for women are applied for just as with a
regular small business loan, namely, through a commercial bank,
or another local, regional, or national bank.
Guaranteed approval for Small Business Administration loans for
women offers women the opportunity to obtain monies without the
hassle or stress involved with wondering whether or not the loan
will be approved. To come to a decision on a loan request with
the Small Business Administration, the SBA evaluates a business
or potential business idea much the same as any other lender.
Small Business Administration loans for women, however,
guarantee a financial institution that the loan will indeed be
paid. The SBA is of huge assistance to small businesses owned by
women, especially if a financial institution will not approve a
business loan. Reasons that a financial institution may not
approve a loan may including the following:
- The borrower has insufficient collateral. - The particular
area of business or industry is a high risk to the financial
institution. - The business is older and requires much updating
to succeed.
In these instances, Small Business Administration loans for
women can come into play, and can assist a woman in obtaining a
loan for business purposes. With guaranteed Small Business
Administration loans for women, the SBA is guaranteeing the
financial institution, or the lender, that 80 percent of a loan
value up to $100,000 will be paid back in the event of default,
and 75 percent will be paid to the lender on loans over $100,000
that default, with a maximum loan value guarantee of $750,000.
Small Business Administration loans for women offer lenders the
security and guarantee that a business loan will be paid back to
the financial institution lending the money if the money is not
paid back by the borrower. Small Business Administration loans
for women are, therefore, a hugely powerful lending tool for
women in business, including those women just entering the
business world by starting a new business, as well as women
purchasing an existing business, or purchasing new equipment or
supplies in an existing business that they currently own but
would like to expand upon in one or more ways. Women who may not
otherwise qualify for a business loan through a bank or other
financial institution can turn to Small Business Administration
loans for women for assistance.
It is important to keep in mind that Small Business
Administration loans for women are not necessarily inexpensive
loans. Interest rates tend to be at, or above, typical interest
rates for commercial loans offered by other financial
institutions and banks. In addition to this, there is a guaranty
fee, typically 3 percent to 3.875 percent, based on the dollar
amount of the guaranteed portion of the loan. Small Business
Administration loans for women also offer a longer amortization
rate than most commercial loans offered through banks and
financial institutions. Working capital loans can be financed
for up to seven years. Fixed asset loans can be financed for up
to ten years, and real estate or construction of a building for
business can be financed for up to 25 years.
Before applying for Small Business Administration loans for
women, it's crucial that all "homework" is done. Check your
credit scores. If there are marks on your credit report, work to
resolve them. Prepare to explain anything that cannot be cleared
up, and be honest. Create have a written summary of your
business, as well as a summary listing everything that will be
purchased should the loan be approved. If the business is
already in existence, be prepared to show reports, bank
statements, and receipts to verify that the loan payments can be
made each month.
For more information on what the Small Business Administration
offers in your area, visit
http://www.sba.gov/regions/states.html, and click on the state
in which you reside or will operate your business. Information
available includes financing information, disaster relief
information, counseling and training resource, opportunities, a
start-up kit, local resources, and other extremely valuable
tools for business.
About the author:
Rebecca Game is the founder of Digital Women ®, an online
community for women in business. A 30 year entrepreneur and
dedicated to helping other women. Visit her site: Loans for
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